Steven J.J. Weisman, Esq.
Steven J.J. Weisman, Esq., attorney in private practice and senior lecturer at Bentley University in Waltham, Massachusetts. He is author of Identity Theft Alert and founder of the scam-information website Scamicide.com.
Bottom Line: It sounds like the same old tax refund scam, but it's much worse.
The latest tax-refund scam can outwit IRS safeguards and create a mess when you file your taxes.
As with earlier tax-refund scams, the new scam starts out with the scammer gaining access to a victim’s Social Security number and other personal info and then filing a fraudulent tax return in that victim’s name. Often these scammers obtain victims’ information by hacking their tax preparers’ computers. That way the scammers can create fake returns that closely mirror the legitimate returns their victims filed the prior year, further reducing the odds that IRS security systems will spot the fraud.
The latest version has a particularly devious twist: Instead of attempting to direct the fraudulent refund to his/her own address or bank, the scammer leaves in place information from past returns that has the refund mailed to the victim’s address or deposited in the victim’s bank account. The goal is to avoid raising red flags in IRS security systems.
But the fraudulent refund is only the bait. Then comes the switch. The scammer calls the victim…claims to work for the IRS or for a collection agency hired by the IRS…explains that an inaccurate refund accidentally was issued…and gives specific instructions on how to “return” this money. The scammer might even threaten legal action or other punishments if the victim does not send the money quickly. The taxpayer/victim then sends the fraudulent refund money from his account…to the scammer. One reason this scam is very effective at duping taxpayers is that the caller mentions the exact amount of the refund—which is information that taxpayers may assume scammers wouldn’t know.
In the end, even if the taxpayer sends the money to the scammer, it’s the IRS that is out the money, not the taxpayer. The IRS won’t come after the taxpayer for the lost money. But when the taxpayer does file his legitimate return, if a refund is due, it will likely take many months for the refund to be issued as the identity theft is unwound and the record set straight.
While this new twist is alarming, the best way to protect yourself hasn’t changed—understand that the IRS never phones a taxpayer out of the blue to demand repayment, and neither does a collection agency representing the IRS. In the very rare cases where there is a phone call, it’s only after numerous “snail mail” notices have been sent without a taxpayer response…and there is never a request during a phone call to wire money.
Bottom line: If you receive a phone call about returning an erroneous IRS tax refund, it is definitely a scam.
Here’s what to do if it happens to you: Hang up and call the actual IRS at 800-829-1040 to report the scam and request instructions. If the fraudulent refund was deposited in your account via direct deposit, you likely will be asked by the actual IRS to contact your bank or credit union and request that it return the funds to the IRS. If you received a paper check and have not yet cashed or deposited it, you likely will be asked to write “VOID” on the check and to mail it to your regional IRS office. If you already cashed or deposited the check, you might have to write a check to the IRS as repayment.
Also, if you used a tax preparer within the past few years, consider contacting that tax preparer to explain what happened and to warn him that his computer system might have been hacked. For more tips on avoiding all kinds of scams, see Bottom Line’s scam files.
